The Red River Division of Alto Company produces and sells bags of pottery clay which can either be sold to outside customers or transferred to the White Mountain Division of Alto Company. The following data are available for the last year:

Red River Division
Production capacity	19,000	bags
Selling price per bag to outside customers	$11	per bag
Variable production cost per bag	$5.5	per bag
Variable selling cost per bag	$2.2	per bag

White Moutain Divison:
Number of bags needed annually	6,400	bags
Price per bag paid to an outside supplier	$8.8	per bag

By selling the White Mountain Division, the Red River Division will avoid $1.2 per bag in selling costs.

If Red River can sell 15,800 bags annually to outside customers, according to the formula in the text, what is the lowest acceptable transfer price from the viewpoint of the selling division?

A) $8.8 per bag

B) $8.15 per bag

C) $11 per bag

D) $6.5 per bag